Sony Rejects Web-Based PlayStation Console

Sony considered but ultimately rejected a download-only scheme for its next videogame console, opting to include optical-disk drives rather than break with a decades-old model in the industry. Ian Sherr has details on digits. Photo: Getty Images.

By

Ian Sherr And

Daisuke Wakabayashi

Updated May 30, 2012 2:25 p.m. ET

Sony Corp. considered but ultimately rejected a download-only plan for its next videogame console, people familiar with the matter said, opting to include an optical disk drive rather than break with decades-old industry practice.

The Japanese electronics maker's flirtation with dropping the optical drive underscores the rising importance of online networks in the videogame industry, which allow console users to download games, television shows and music without the need for disks or cartridges.

Sony is planning a 2013 release for the successor to its PlayStation 3 console, people familiar with the matter said.

Consoles without optical drives would likely add to pressures on brick-and-mortar and online retailers that sell game disks.

But Sony decided against a download-only model largely because Internet connections are too inconsistent around the world, one of the people familiar with Sony's thinking said. Because game files are large, customers in countries where Internet connections are relatively slow would be hobbled by a requirement to download games, the person said.

ENLARGE

Sony is looking to the next generation of its gaming consoles. Above, a 2009 poster of the Sony Playstation logo.
Reuters

A Sony spokesman declined to comment.

Microsoft Corp.MSFT-0.38% is planning to include an optical disk drive in the successor to its Xbox 360 console, according to a person familiar with the matter. The software company also had concerns about access to Internet bandwidth, the person said.

A Microsoft spokesman declined to comment.

Both console makers have taken an unusually long time to update the hardware that is crucial to driving demand in the lucrative game category. Prospects for new consoles are likely to be a hot topic at the E3 videogame exposition in Los Angeles next week, though the only formal announcement expected is a successor for Nintendo Co.NTDOY-1.87%'s six year-old Wii, the Wii U.

The success of a new PlayStation is especially critical for Sony and new Chief Executive Kazuo Hirai, who is trying to stop financial bleeding in the company's other electronics operations. As a bright spot in the struggling conglomerate, the games business is also the prime example of how Sony plans to deliver content to its devices using its online network.

After posting initial losses from the PlayStation 3, Sony's games unit has reported a profit in the last two years. The console and Microsoft's Xbox 360 are neck-and-neck in global market share as the No. 2 game machine, behind Nintendo's Wii, among the current generation of game machines. Unlike its two predecessors, the PS3 never became the world's best-selling console.

While hardware makers offer online options, only a few have been successful at a download-only model.

Apple Inc.,AAPL-0.87% for example, in 2008 launched an app store that provides games and other software for its mobile devices. The Silicon Valley company says it has logged more than 25 billion app downloads from the store. Others, including Google Inc., have followed in Apple's footsteps.

Some retailers have already sensed this shift and have moved to mitigate it.

Popular videogame retailer GameStop Corp.GME-0.67% has begun branching into direct sales of Internet-delivered products, selling codes for games that customers can plug into their computer or game console and use to download a title. The Grapevine, Texas, company also has begun selling codes for additional content for existing games, such as extended stories and extra maps.

GameStop CEO Paul Raines said his company expects a transition to online-only consoles to happen at some point.

"If we all agree the technology is inevitable—which I think it is because it's like death and taxes—it's still going to take longer to happen than it did for music and movies," Mr. Raines said recently. He noted that many game files are several times larger than a typical high-definition movie, requiring customers to wait a long time before they can play a new game.

Some retailers also trade, buy and sell used games. That effort, which GameStop said has has helped create about $1 billion of extra sales for the industry each year, would also likely be seriously affected by a move to direct digital sales.

While Sony will stick to disk drives in its next PlayStation, the company is expected to change some aspects of the console. One of the latest prototypes uses microprocessors and graphics technology made by Advanced Micro Devices Inc.,AMD0.00% people familiar with the matter said. Sony currently relies on a technology called the Cell chip, which was developed jointly with International Business Machines Corp.IBM0.64% and Toshiba Corp.65886.90% The move would also end a long-running partnership with Nvidia Corp.NVDA-0.35% for graphics chips.

AMD and Nvidia spokesmen declined to comment.

The Cell chip was a selling point for the PlayStation 3, which went on sale in 2006.

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